Brazil: Social Security Contributions on Tax Stamps remain

Recently, the highest chamber of the Administrative Committee of Tax Consultants (CARF) received a note from the Ministry of Finance stating that gains – such as the supplementary payment for food from employers to employees – will be included when calculation social security contributions. Despite the taxation, the employees should continue receiving the same amount of money.

This decision created a conflict and insecurities for taxpayers particpating in PAT (Programa de Alimentação do Trabalhador – nourishment program for employees) which includes 240.000 members. The program which has been initiated in 1976 by the Ministry for Labor is aimed at providing workers with adequate food while creating tax incentives for companies.


Previous Regulation

Participating in the program has granted companies the exemption from social security contributions on food-expenses. Furthermore, a company that decided to use the taxation method “lucro real” can deduct up to 4% of expenses for the program.

The current decision follows a trend of judgments. However, the last word has not been spoken on the issue because the federal court – which is known to be in favor of the taxpayers – might reaction the decision.